Stablecoins Are Not Necessarily Banks’ Enemies—They Can Be Cash Cows
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Stablecoins Are Not Necessarily Banks’ Enemies—They Can Be Cash Cows
A $30 billion stablecoin is, in fact, a $3.6 billion revenue windfall.
Navigating Web3 tides with focused insightsBy James, Head of Ecosystem at the Ethereum Foundation
Translated by Chopper, Foresight News
Last year, I spoke with Tony McLaughlin for the first time—shortly after he’d left Citigroup to found Ubyx. What struck me most was how, despite having spent two decades at one of the world’s top banks, he spoke about public blockchains with the conviction of a crypto-native—and yet every argument he made was grounded in real-world mechanisms like check clearing and correspondent banking.
As a payments industry veteran, McLaughlin genuinely believes the infrastructure he spent his career building is about to be replaced.
McLaughlin is not the kind of startup founder we typically imagine. He’s a seasoned payments executive from one of the world’s largest banks—and his approach to building a company reflects that: propose an idea, bring it to market, and let the market tell you whether it’s right or wrong.
So how do stablecoins truly become ordinary money—the kind that sits in your bank account, fully interchangeable with cash?
His answer involves an infrastructure so mundane that most people in crypto have never considered it—and most people in traditional banking haven’t yet realized they need it.
Build the System Yourself—Then Walk Away
Let’s briefly summarize McLaughlin’s career trajectory—his background is essential to this story.
He spent nearly 20 years at Citigroup, rising to Managing Director of Treasury and Trade Solutions, with a focus on emerging payments. During that time, he became the principal architect of the Regulated Liability Network (RLN)—arguably one of the most influential institutional blockchain concepts of the past five years.
RLN proposed a shared private ledger where central banks, commercial banks, and e-money institutions could all issue tokenized liabilities on the same platform—a regulated-sector response to public cryptocurrencies.
McLaughlin completed proof-of-concepts with the Federal Reserve and the UK Finance Association; the concept also influenced the Monetary Authority of Singapore. The Bank for International Settlements (BIS) acknowledged RLN as inspiration for its “Unified Ledger” concept. The Agorá project adopted a similar architecture, uniting seven central banks and over 40 financial institutions. By any measure, this is heavyweight infrastructure.
Then McLaughlin resigned—and walked away from the project entirely.
For years, he had championed private permissioned chains as the future for regulated money. The technology itself wasn’t the problem—the problem was solving the cold-start challenge.
You’re asking every major global bank and central bank to join a network that doesn’t yet exist—and no one wants to go first. On a podcast, he called it the “bootstrapping problem”: you must launch the network before others will use it, but no one will help you launch it because no one is using it yet.
Public blockchains solved this problem long ago. They already have users, liquidity, and developers. Cold starts are history.
The moment that crystallized everything for him was the 2024 U.S. presidential election. Watching the political landscape unfold, he concluded that stablecoin regulation was inevitable—which meant banks would ultimately be permitted to operate on public blockchains, since stablecoins reside there. The GENIUS Act, signed into law in July 2025, proved him right.
He described the decision plainly: “From that day forward, I decided I wouldn’t spend a single second of my life promoting private permissioned chains.”
He left Citigroup and founded Ubyx in March 2025.
Banks’ Misconception About Stablecoins
On March 3, 2026, President Trump publicly accused U.S. banks of “sabotaging” the GENIUS Act and “holding hostage” his crypto agenda. The core point of contention? Yield.
Banks have vigorously lobbied against interest-bearing stablecoins, arguing they’ll siphon deposits out of the traditional banking system. The Bank of England, for the same reason, is considering caps on stablecoin holdings.
This fear is real: global stablecoin issuance has surpassed $300 billion. If that represents deposits exiting commercial bank balance sheets, the impact on credit capacity would be enormous.
But McLaughlin believes the question is being asked backward. Over the past year, he’s repeated a single argument across every forum and podcast: stablecoins aren’t a threat to deposits—they’re a massive revenue gift.
And the root of the misconception lies in how people categorize the tool.
He says: “If regulators define stablecoins as ‘cryptographic assets pegged to fiat currency,’ I think they’ve made a fundamental error. That’s like saying ‘a check is a piece of paper pegged to fiat currency.’”
His point is that regulators are making a mistake with stablecoins that they’d never make with checks: defining the instrument by its technology (a cryptographic token) rather than its function (a promise to pay at face value). Technology is incidental—the promise is central.
Writing “I owe you $10” on a clay tablet, a piece of paper, or an ERC-20 token on Ethereum produces the same legal instrument. What matters is who makes the promise—and whether that promise is enforceable.
In his framework, stablecoins aren’t novel crypto-native artifacts. They’re the latest manifestation of one of commercial law’s oldest tools: negotiable instruments.
He compares them to American Express traveler’s checks from 1891.
If you’re under 35, you may never have used—or even heard of—them. Before debit cards and ATMs went global, traveler’s checks were the primary way people carried cash abroad. You’d buy them in advance from American Express or a bank, pre-funding their face value. Then you’d spend them anywhere in the world like cash—merchants or local banks accepted them at face value because a clearing network guaranteed they’d get paid by the issuer.
I remember using them while backpacking through Asia—and still get a headache recalling the experience: standing in bank queues, signing and re-signing, waiting for staff to call the issuer, suffering terrible exchange rates. No wonder traveler’s checks vanished almost overnight once debit cards caught on.
Yet their attributes match stablecoins exactly: dollar-denominated, non-bank issued, pre-funded, fully collateralized, non-interest-bearing, transferable to bearer, redeemable at face value.
McLaughlin’s analogy is correct—but most listeners didn’t truly grasp it. Most people can’t see the stablecoin clearing problem precisely because most people have never used the tool that once solved it. Traveler’s checks are gone—and the clearing infrastructure behind them has faded into forgotten history. So when McLaughlin says “stablecoins need what traveler’s checks had,” listeners nod politely without truly understanding.
Once you adopt this lens, the question shifts from: “How do we protect deposits from stablecoin disruption?” to: “How do we handle stablecoins the same way we’ve handled all other negotiable instruments for the past 200 years?”
The Boring—but Critical—Part
Traveler’s checks were accepted globally at face value—not because of anything special about the paper, but because American Express, Visa, and Thomas Cook built clearing networks guaranteeing merchants in any country could convert them into cash at par.
When those acceptance networks collapsed, traveler’s check usage cratered—not because the tool failed, but because the channel did.
Stablecoins are now in precisely the same position. They can cross borders in seconds on public blockchains—but there’s no universal mechanism enabling regulated financial institutions to redeem them at face value.
If you’re a stablecoin issuer, you must build your own distribution network from scratch—negotiating bilateral partnerships one by one. If you’re a bank wanting to accept stablecoins for customers, you must negotiate individually with each issuer. Complexity scales geometrically.
McLaughlin’s favorite example is credit cards. Thousands of banks worldwide issue them—yet you rarely walk into a store and hear, “Sorry, we don’t accept your card.”
That fragmentation is invisible to users because Visa and Mastercard sit in the middle, enabling every card to work everywhere.
Stablecoins have fragmentation—but no clearing network. This is the gap Ubyx aims to fill.
How Clearing Actually Works
The mechanism design is extremely simple—and its distinction from crypto exchanges is precisely the point.
On exchanges, stablecoins trade at floating market prices, with no guarantee of redemption at par. Exchanges are trading venues—when demand falls, price follows.
Ubyx does not operate this way. It uses a collection model—not a trading model. Its goal is redemption at par, just like depositing a check into your bank account.
You don’t care who issued the check or which bank it came from. You hand it to your bank, and your bank credits your account at face value—while a clearing system collects funds from the issuing bank behind the scenes. If the check bounces, the bank returns it to you. That’s it.
Ubyx’s process works the same way:
- A customer deposits stablecoins (e.g., USDC) into their bank’s custody wallet
- The bank submits the tokens to Ubyx
- Ubyx forwards them to the issuer (in this case, Circle)
- The issuer validates the tokens’ legitimacy and releases fiat from its pre-funded reserves held at a settlement bank
- Dollars flow back to the accepting bank via Ubyx, which credits the customer’s account (typically converting to local currency, net of exchange rate spread)
If the issuer fails to pay, the bank returns the tokens to the customer—just like a bounced check. The bank bears no balance-sheet risk during clearing.
McLaughlin describes this system as a “black box” with three modes:
- Stablecoins in, cash out (redemption)
- Cash in, stablecoins out (issuance)
- Stablecoin A in, stablecoin B out (exchange)
It’s designed to be issuer-agnostic, chain-agnostic, and fiat-agnostic. At launch, issuers include Paxos, Ripple, Agora, Transfero, Monerium, GMO Trust, BiLira, and more than a dozen others—covering USD, GBP, EUR, and emerging-market currencies across multiple public blockchains.
For banks, technical integration costs are deliberately minimized. Most banks won’t build their own blockchain infrastructure—and even if they did, they’d still need to solve the trust problem among peer institutions.
$36 Billion
This is where the “deposit flight” narrative flips.
McLaughlin’s rough calculation: assume the stablecoin market reaches $1 trillion (it’s currently $300 billion and growing). Conservatively assume 0.5% of circulating tokens are redeemed daily—yielding ~$1.8 trillion in annual redemptions.
If banks charge 100 basis points in fees plus another 100 basis points in cross-border FX spreads, annual revenue would reach $36 billion.
These are his assumptions—but the math checks out. For any bank, the question becomes: how much of this do you want?
This economic upside is especially attractive for non-U.S. banks. Every dollar stablecoin entering a European or Asian bank’s system and converted to local currency generates pure foreign-exchange revenue for the accepting bank—FX business is practically “hyper-profitable” for banks.
Over the past year, McLaughlin has consistently referred to offshore stablecoins as “gifts.”
The alignment of this model with central bank objectives elevates it beyond mere revenue arithmetic—making it far more persuasive.
When stablecoins enter custody wallets via regulated institutions, they become visible to tax authorities, undergo AML/KYC screening, and convert into local-currency liabilities on domestic bank balance sheets. Central banks gain compliance and monetary transparency; commercial banks earn fee income and expand their balance sheets; customers receive par-value redemption.
McLaughlin’s advice to bank CEOs is highly specific: “Accept first, issue later.” “On stablecoins, accepting is better than issuing—because you can earn substantial revenue by accepting.”
The most direct commercial logic lies in accepting and exchanging third-party stablecoins. Once a shared acceptance network is built, any bank can clear any stablecoin just as easily as it clears Visa transactions—dramatically lowering the barrier to issuance.
At that point, issuing your own stablecoin becomes as simple as issuing a credit card—you don’t need to build the acceptance network; you just plug in.
Who Endorses This Argument
Ubyx’s shareholder list is worth examining—it tells you which forces recognize its validity.
Ubyx closed a $10 million seed round in June 2025, led by Galaxy Ventures. Other investors form a “dream team”—a group whose members rarely appear together on the same cap table: Peter Thiel’s Founders Fund, Coinbase Ventures, VanEck, and LayerZero.
Silicon Valley libertarian capital, top crypto exchanges, and major traditional asset managers are all investing in stablecoin clearing infrastructure. Several investors are also network participants: Paxos and Monerium are both investors and issuers within the network; Payoneer and Boku invested as strategic partners.
This “investor-as-user” structure is intentional. McLaughlin explicitly compares it to Visa and Mastercard’s early equity structures: banks that use the network are the banks that own it.
In January 2026, Barclays made a strategic investment—the UK’s second-largest bank by market capitalization, and its first-ever investment in a stablecoin company. Ryan Hayward, Head of Digital Assets & Strategic Investments at Barclays, stated: “Interoperability is key to unlocking the full potential of digital assets.”
The subtext: one of Europe’s most systemically important banks has grasped the logic of stablecoin clearing—and voted with its capital.
One month later, AB Xelerate—the fintech accelerator of Arab Bank—also made a strategic investment. Now, U.S. VCs, European banks, and Middle Eastern financial infrastructure are all betting on the same direction.
What Could Go Wrong?
Circle launched its own Circle Payments Network in mid-2025, providing proprietary infrastructure for USDC settlement. Circle has sufficient scale to build its own distribution system independently.
The market question is: will the end state be a single-issuer network (the Circle path), or a multi-issuer clearing system (the Ubyx path)? McLaughlin argues history favors diversified clearing models—but Circle’s first-mover advantage and dominant market share are real.
The revenue conflict between banks and crypto firms remains unresolved. A draft rule proposal from the U.S. Office of the Comptroller of the Currency (OCC) includes a rebuttable presumption opposing stablecoin yield mechanisms.
If yield is banned, banks can breathe easier—since stablecoins would remain less attractive than savings accounts for cash holders. But this would also confine stablecoins largely to payments and settlement—limiting market size and slowing Ubyx’s growth.
If yield is permitted, stablecoin markets will explode—competing directly with deposits, money market funds, and Treasury bills for idle capital. Banks have every incentive to rapidly build infrastructure—not only defensively (to retain customers), but offensively (to capture FX and fee revenue).
Ubyx promises an open-source rulebook and eventual DAO governance via tokens. Conceptually, this aligns with the decentralized networks it connects—but it remains untested within the regulated financial market infrastructure banks rely upon.
Summary
McLaughlin’s career has unfolded in three phases. Phase One: defending the fiat system against crypto challenges. Phase Two: building private chains for banking. Phase Three: concluding that private chains cannot solve the adoption problem.
The shift hinges on where he sees money sitting—in public blockchains, in wallets, cleared through infrastructure that makes every regulated stablecoin as reliable—and harmless—as a check.
He believes the entire transition turns on one sentence: “Banks can process stablecoins the same way they process checks.”
If an authoritative voice says that, every bank and fintech firm worldwide will instantly know what to do. Ubyx is betting that voice will speak soon.
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